Net zero is the defining challenge of the current business climate. Organisations are being confronted to reduce their harmful activities so that the global temperature increase does not lead to catastrophic environmental damage. Collecting data for carbon reporting is the first important step business must take to address their climate impact.
Businesses face increasing pressure and mounting obligations to measure and report their carbon emissions. By recognising that climate change poses financial risks, in addition to the implementation of climate disclosure obligations and the increasing concerns from consumers and stakeholders, businesses must account for their climate impact to remain viable.
The new demand to measure and report carbon measures has compelled businesses worldwide to start this process. However, many businesses do not know where or how to begin.
For a business to comprehensively account their carbon footprint, it must first establish frameworks and procedures within which they can accurately measure carbon emissions of their activities.
Here are five steps businesses like yours can follow to start successfully collecting data for carbon reporting.
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Define organisational boundary
One of the first steps in accounting for carbon emissions is to make sure one’s processes are aligned with relevant calculations and reporting frameworks. It’s critical for a business to define operational boundaries, which provide businesses a better understanding about what measurements can be made within an organisation and delineate those that lie outside those parameters. This is known as setting organisational boundaries as it pertains to carbon emissions reporting.
There are two approaches to defining organisational boundaries: the equity approach and the control approach.
The equity approach – also known as equity share approach – refers to a business accounting for its GHG emissions in proportion to the equity share of an operating entity. For example, if Company A has 60 percent controlling stake and another company has 40 percent controlling stake, Company A is responsible for accounting for its particular share of GHG emissions, and Company B the remaining. This approach reflects the economic risks shared by the companies in their share of emissions boundaries.
In a control approach, a company is responsible for 100 percent of the emissions from all operations it controls. It means, then, that a company with no control over an operation has no responsibility for those relevant emissions.
The control approach can be broken down further into two approaches: financial control or operational control.
A company is considered under the financial control boundary if it has the majority of risks and rewards of ownership of the operation’s assets and has overall control over its financial policies. Operational control is considered when the company or one of its subsidiaries has full control over the day-to-day policies of a company.
Define operational boundary
Once the organisational boundary is set, a company then needs to decide, on the basis of its business goals, whether to account only for scope 1 and scope 2, or whether to include material scope 3 categories for its operations. If the equity approach is selected, the company would account for the GHG emissions of each operation in the chosen scopes.
Scope 1 emissions are direct GHG emissions that come from the activities of a company. In other words, these emissions are sourced from assets owned or controlled directly by an organisation. The fuel that a company burns from its fleet of vehicles is an example of this.
Scope 2 emissions come from purchased electricity for a business’ own use. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organisation’s greenhouse gas inventory because they are a result of the organisation’s energy use.
Scope 3 emissions are emissions that occur externally from a business, as the result of the purchasing of goods or services offered by the company, as well as business travel, employee commutes, and waste management.
Establish a base year for carbon reporting
Once a company has established the organisational and operational boundaries for their net zero journey, they need to choose a base year to which they will compare data that is collected along the way. It is important to select a base year that is recent and reflective of the company’s typical energy consumption and carbon emissions. This will ensure that the data provides an accurate representation of the company’s progress towards net zero.
Additionally, it is important to select a base year that is representative of a business’ current conditions. For example, if a company has made significant changes to their operations in recent years, it would be more representative to use a base year that reflects these changes.
By selecting an appropriate base year, companies can ensure that their net zero journey is accurately represented in data form.
Identify emissions and consumption sources
It is essential for businesses to correctly identify which activities within their defined boundaries generate carbon emissions in order to effectively manage carbon emissions and meet net zero targets. Data on energy consumption and GHG emissions must be collected and accurately categorised into scope 1, 2, or 3 emissions.
This step is critical to ensuring businesses are able to develop an effective carbon management strategy and comply with carbon reporting requirements. Failing to properly categorise carbon emissions can result in businesses overestimating or underestimating their carbon footprint, which could lead to ineffective carbon management and ultimately hinder a business’s ability to meet its net zero targets. Properly categorising carbon emissions is therefore essential to developing an effective carbon management strategy and ensuring compliance with carbon reporting requirements.
Collect activity data and establish baseline
To establish a baseline carbon emissions level, a business should first collate all relevant data from sources such as procurement records, electricity bills, and supply chains. This data will provide a comprehensive picture of the carbon emitted by the business through its daily operations.
Once all the data has been gathered, it should be analysed to identify patterns and trends in energy consumption. This analysis will allow the business to establish a baseline carbon emissions level against which future emissions can be compared. By regularly monitoring and reducing carbon emissions, businesses can play an important role in tackling climate change.
How can ClearVUE.Business help you collect carbon data?
We combine world-class net zero consultancy with industry-leading carbon accounting technology to help businesses streamline their carbon accounting and reporting processes.
Carbon data collecting, analysis, and reporting is an important task to undertake as we seek to decarbonise our economies and futureproof our businesses and our world. Our teams of sustainability consultants and energy managers alleviate the workload for businesses by tackling the steps to carbon data collecting described above.
Underpinning our services is ClearVUE.Zero, our carbon and energy accounting platform designed to make data collecting activities easy and less time consuming. In one easy-to-use system, you can measure and monitor the carbon emissions of all your business activities, down to circuit level. Combine this with third-party emissions data collated by our sustainability consultants, and your business will have a full understanding of your carbon footprint and clear view on how to reduce it.
Book your free demonstration of the ClearVUE.Business solution today.